Dramatic images have emerged of the moment a tactical counter-terrorism unit apprehend a Somali-Australian 'ISIS sympathiser' who was allegedly planning to execute a major terrorist attack.

The 20-year-old Muslim man can be seen being restrained by officers in front of shocked onlookers outside a restaurant on a busy street moments after his arrest.

The Somali-Australian man, known as Ali Shire but believed to have changed his name to Ali Ali, was allegedly coordinating an attack where he would shoot 'as many people as he could' in Melbourne's packed Federation Square on New Year's Eve.

Police allege Ali tried to obtain an automatic rifle to carry out the horrific act, inspired by radical Islamist propaganda produced by terrorist group al-Qaeda.

The young man is due to appear in Melbourne Magistrates Court before 3pm on Tuesday.

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Dramatic images have emerged of the moment a tactical counter-terrorism unit apprehend an 'ISIS sympathiser' who was allegedly planning to execute a major terrorist attack

Police allege Ali tried to obtain an automatic rifle to carry out the horrific act, inspired by radical Islamist propaganda produced by terrorist group al-Qaeda

Ali Ali, a Muslim Somali-Australian, 20, has been charged with terrorism offences for allegedly planning to shoot 'as many people as he could' in Melbourne on New Year's Eve

Ali, who reportedly no longer has a formal name, was described by his boss at a local computer business as 'a very quiet guy'.

'It's very sad, it's a shock,' Warsame Hassan told the Herald Sun. 'If I had (noticed suspicious behaviour) then I would have told the police.'

The business has been raided and the computer Ali used has been seized by police.

It is believe they had been monitoring Ali for months, but his alleged radicalism has increased over time and police believe he was seeking out obtaining an automatic weapon.

He had recently dropped out of Swinburne University in Hawthorn, and was a regular visitor at the Virgin Mary mosque near his family home in Melbourne's west.

Members of the mosque described Ali's family as good members of the community.

Ali, who reportedly does no longer have a formal name, was described by his boss at a local computer business as 'a very quiet guy'

The 20-year-old Muslim man can be seen being held down by the officers in front of shocked onlookers and outside a restaurant on a busy street moments after his arrest

It is believe they had been monitoring Ali for months, but his alleged radicalism has increased over time and police believe he was seeking out obtaining an automatic weapon

Melbourne woman Jessica Karasmanis witnessed the dramatic moment Shire was arrested in Werribee, west of the CBD.

Ms Karasmanis told Daily Mail Australia she was stopped at a set of traffic lights when she spotted 'at least five men' dressed in heavy body armour holding down a man.

'They had his hands tied behind his backs and on the ground,' she said.

'They stood him up and placed him behind the building.'

The arrest followed raids on his home in Werribee, a relative's house in Meadow Heights and a computer business in nearby Footscray where he worked part-time. Officers returned to the home on Tuesday

Investigators returned to the suburban home in Werribee where Shire lived with his parents and brothers on Tuesday morning and remained there throughout the day

The arrest followed raids on his home in Werribee, a relative's house in Meadow Heights and a computer business in nearby Footscray where he worked part-time.

Investigators returned to the suburban home in Werribee where Shire lived with his parents and brothers on Tuesday morning and remained there throughout the day.

Detectives were seen hauling bags of evidence out of the home.

The practising Muslim was born in Australia, is an Australian citizen and his parents were from Somalia, Deputy Commissioner Shane Patton said on Tuesday.

'The male is one of our high-risk persons of interest. We have been monitoring him for a very lengthy period of time,' he told reporters on Tuesday.

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Shire allegedly accessed a guidebook produced by al-Qaeda containing information on how to commit a terrorist act (Federation Square pictured on New Year's Eve in 2015)

Police allege the young Muslim terror suspect had tried to obtain an automatic rifle to carry out the act and was inspired by radical Islamist group Al-Qaeda (fighters pictured in 2014)

Following the arrest federal Justice Minister Michael Keenan said the government does not target a specific ethnic group as part of its terror investigations.

'The Muslim community is not being targeted by the government,' he said.

'We'll go after individuals, we don't target a specific community, and we require the Muslim community to work with us.'

Described as an 'ISIL-sympathiser' by Mr Keenan, the alleged terrorist is being interviewed in relation to the offences of preparing to commit a terrorist attack and collecting documents to facilitate a terrorist act.

It's alleged the man accessed a guidebook produced by al-Qaeda containing information on how to commit a terrorist act and use firearms, guns and handguns and rifles.

Authorities were keen to stress that no firearm was obtained.

But if the attack had been successful the human cost would have been 'catastrophic ... horrendous', Mr Patton said.

The practising Muslim was born in Australia, is an Australian citizen and his parents were from Somalia, Deputy Commissioner Shane Patton said on Tuesday

WHAT WE KNOW

* He's an Australian-born, 20-year-old man.

* Allegedly plotted to obtain a firearm to 'shoot and kill as many people as he could' at Melbourne's Federation Square on New Year's Eve.

* Lives with his Somalia-born parents in Werribee, is a Muslim but not linked to any specific mosque.

* Police said he'd been 'high-risk person of interest' since early 2016 and claimed he would become 'energised' online when learning of overseas terrorist attacks.

* Allegedly obtained Al-Qaeda material through the internet and was an Islamic State sympathiser.

* Arrested on Monday by Victoria Police, Australian Federal Police and ASIO officers.

* Charged on Tuesday with planning to commit a terrorist attack and collecting documents to facilitate a terrorist act.

Source: Victoria Police, Australian Federal Police

The man is also believed to be associated with a group of Victorian extremists.

'We won't identify who they are. It is a very small community of extremist,' Mr Patton said.

'There is no ongoing threat posed in respect to New Year's Eve, Christmas or any other area.'